Riders to win after bike company goes public?

Riders may be the winners after Australia’s largest motorcycle dealership network, Motorcycle Holdings Ltd, today become the first motorcycle dealership to go public with a listing on the Australian Stock Exchange (ASX).

MC Holdings owns 34 franchises at 24 locations including TeamMoto dealerships and stores such as Morgan & Wacker in Brisbane.

The ASX stock (code MTO) listed at $2.57 from an issue price of $2 which was a nice return of 28% for the lucky holders and boosted the company’s market value by $22 million to $98 million. It closed at $2.71, up another 8.4%.

The market success of this company will become a barometer for the performance of the motorcycle industry in Australia.

It could be good for riders as it shows the business community that the motorcycle market has come of age and should be treated with some respect.

Extra funds from the public listing may also further the multi-dealership company’s buying strength so they can secure product at even lower costs, which should flow on as cheaper prices for riders.

However, in the long term, it means MC Holdings will be tied to the whims of shareholders who will demand increasing returns from ever-increasing profits, dividends and capital growth.

Could that lead to long-term price hikes (and lower trade-in prices) to increase profit margins and satisfy shareholders?

We will keep a close eye on this one and hope it doesn’t end up another Dick Smith!

MC Holdings has forecast revenue of $213 million in 2015/16, up from $186 million in the previous year, while net profit is expected to rise to $6.9 million.

As part of the market listing, private equity and venture capital firm Archer Capital’s Growth Fund has cut its stake in MC Holdings from 61% to 10% and CEO David Ahmet decreased his stake from 30% to 22%.

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3 Comments

Whilst I havent done any research beyond the numbers presented I see that private Equity (the smartest guys in the room) have cut their stake by a significant margin and so has the CEO (usually the last to hold on in un-listed, family-run businesses). The sceptic in me thinks that IPO was to buy-out the PE and CEO.

A publicly listed company has share holders, the company’s priority is to it’s share holders. Share holders are never happy with their returns and all ways want more. One of the main reasons we have to pay so much for most things we buy in Australia.

In the long term, it may mean improved customer experiences, as the majority of public companies have documented business processes which must be adhered to. I doubt it will negatively impact prices to the customer either in terms of new bikes, trade ins nor used bikes, unless the company holds a monopoly in an area, which current consumer laws do not allow. there will be other changes and impacts, but I will leave that for another time……….